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CITY OF HAYWARD
Reissued Audit Report
ANIMAL ADOPTION PROGRAM
Chapter 725, Statutes of 1998;
and Chapter 313,Statutes of 2004
July 1, 1998, through June 30, 2008,
excluding July 1, 2003, through June 30, 2005
BETTY T. YEE California State Controller
December 2017
BETTY T. YEE
California State Controller
December 29, 2017
The Honorable Barbara Halliday
Mayor of the City of Hayward
777 “B” Street
Hayward, CA 94541-5007
Dear Mayor Halliday:
The State Controller’s Office (SCO) audited the costs claimed by the City of Hayward for the
legislatively mandated Animal Adoption Program (Chapter 752, Statutes of 1998; and
Chapter 313, Statutes of 2004) for the period of July 1, 1998, through June 30, 2008, excluding
July 1, 2003, through June 30, 2005.
This report is a reissue of the May 6, 2011 final audit report. The previous report identified
$1,339,152 in unallowable direct and indirect costs for fiscal year (FY) 1998-99 through
FY 2002-03, and FY 2005-06 through FY 2007-08. On January 11, 2017, the Commission on
State Mandates (Commission) issued a proposed decision in response to the city’s Incorrect
Reduction Claim for the Animal Adoption Program. In its proposed decision, the Commission
directed the SCO to reinstate $56,694 in direct costs. As a result, allowable costs increased by
$56,694, from $1,024,131 to $1,080,825.
The city claimed $2,363,283 for the mandated program. Our audit found that $1,080,825 is
allowable and $1,282,458 is unallowable. The costs are unallowable because the city claimed
unallowable costs, estimated costs, misclassified costs, claimed ineligible employees, claimed
ineligible animals and incorrect pro rata percentages, misstated animal census data, and
overstated offsetting revenues. The State paid the city $900,805. The SCO’s Local Government
Program and Services Division will send a separate notification letter to resolve the amount paid
in excess of allowable costs, totaling $180,020. The letter will be sent within 30 days from the
issuance date of this report.
If you have any questions, please contact Jim L. Spano, CPA, Assistant Division Chief, by
telephone at (916) 323-5849.
Sincerely,
Original signed by
JEFFREY V. BROWNFIELD
Chief, Division of Audits
JVB/as
The Honorable Barbara Halliday -2- December 29, 2017
cc: Dustin Claussen, Director of Finance
City of Hayward
Marichu Maramba, Accounting Manager
City of Hayward
Thanh Nguyen, Senior Accountant
City of Hayward
Cheryl Amaral, Finance Technician
City of Hayward
Maria Walter, Revenue Manager
City of Hayward
Jennie Comstock, Animal Services Administrator
Hayward Animal Services
Chris Hill, Principal Program Budget Analyst
Local Government Unit, California Department of Finance
Steven Pavlov, Finance Budget Analyst
Local Government Unit, California Department of Finance
Anita Dagan, Manager
Local Government Programs and Services Division
State Controller’s Office
City of Hayward Animal Adoption Program
Contents
Reissued Audit Report
Summary ............................................................................................................................ 1
Background ........................................................................................................................ 1
Objective, Scope, and Methodology ................................................................................. 2
Conclusion .......................................................................................................................... 3
Views of Responsible Officials .......................................................................................... 3
Reason for Reissuance ....................................................................................................... 4
Restricted Use .................................................................................................................... 4
Revised Schedule 1—Summary of Program Costs ............................................................. 5
Schedule 2—Summary of Care and Maintenance Costs .................................................... 8
Revised Findings and Recommendations ............................................................................. 12
City of Hayward Animal Adoption Program
-1-
Audit Report
The State Controller’s Office (SCO) audited the costs claimed by the City
of Hayward for the legislatively mandated Animal Adoption Program
(Chapter 752, Statutes of 1998; and Chapter 313, Statutes of 2004) for the
period of July 1, 1998, through June 30, 2008, excluding July 1, 2003,
through June 30, 2005.
The city claimed $2,363,283 for the mandated program. Our audit found
that $1,080,825 is allowable and $1,282,458 is unallowable. The costs are
unallowable primarily because the city claimed unallowable costs,
estimated costs, misclassified costs, claimed ineligible employees,
claimed ineligible animals and incorrect pro rata percentages, misstated
animal census data, and overstated offsetting revenues. The state paid the
city $900,805. The SCO’s Local Government Programs and Services
Division (LGPSD) will send the city a separate notification letter to
resolve the allowable costs in excess of the amount paid, totaling
$180,020. The letter will be sent within 30 days from the issuance date of
this report.
Food and Agriculture Code sections 31108, 31752-31753, 32001, and
32003 (added and amended by Chapter 752, Statutes of 1998) attempted
to end the euthanasia of adoptable and treatable animals. The statutes
expressly identify the State policy that no adoptable animal should be
euthanized if it can be adopted into a suitable home, and that no treatable
animal should be euthanized. The legislation increases the holding period
for stray and abandoned dogs, cats, and other specified animals. It also
requires public or private shelters to:
Verify the temperament of feral cats;
Post lost-and-found lists;
Maintain records for impounded animals; and
Ensure that impounded animals receive necessary and prompt
veterinary care.
On January 25, 1981, the Commission on State Mandates (Commission)
determined that Chapter 752, Statutes of 1998, imposed a state mandate
reimbursable under Government Code (GC) section 17561.
The program’s parameters and guidelines establish the state mandate and
define reimbursement criteria. The Commission adopted the parameters
and guidelines on February 28, 2002, corrected them on March 20, 2002,
and last amended them on January 26, 2006. In compliance with GC
section 17558, the SCO issues claiming instructions to assist local
agencies and school districts in claiming mandated program reimbursable
costs.
The California State Legislature suspended the Animal Adoption Program
in the Budget Acts for fiscal year (FY) 2010-11 through FY 2015-16.
Summary
Background
City of Hayward Animal Adoption Program
-2-
We conducted the audit to determine whether costs claimed represent
increased costs resulting from the Animal Adoption Program for the
period of July 1, 1998, through June 30, 2008, excluding July 1, 2003,
through June 30, 2005.
Our audit scope included, but was not limited to, determining whether
costs claimed were supported by appropriate source documents, were not
funded by another source, and were not unreasonable and/or excessive.
To achieve our audit objective, we performed the following procedures:
Reviewed annual claims filed with the SCO in order to identify any
mathematical errors, and performed analytical procedures to
determine if there were any unusual or unexpected variances from year
to year;
Completed an internal control questionnaire and performed a
walkthrough of the claim preparation process to determine what
information was used, who obtained it, and how it was obtained;
Interviewed city staff to determine employee classifications involved
in performing the reimbursable activities during the audit period;
Verified the validity of the claimant’s raw data on animals and
corrected any data error entries;
Traced costs claimed to supporting documentation that showed when
the costs were incurred, the validity of such costs, and their
relationship to mandated activities;
Traced productive hourly rate calculations for city employees to
supporting documentation in the city’s payroll system;
Determined whether indirect costs claimed were properly supported
and applied;
Inquired whether the claimant realized any offsetting savings or
reimbursements from the statutes which created the mandated
program; and
Recalculated allowable costs claimed using audited data.
We conducted this performance audit under the authority of GC
sections 12410, 17558.5, and 17561. We did not audit the city’s financial
statements. We conducted the audit in accordance with generally accepted
government auditing standards. Those standards require that we plan and
perform the audit to obtain sufficient, appropriate evidence to provide a
reasonable basis for our findings and conclusions based on our audit
objectives. We believe that the evidence obtained provides a reasonable
basis for our findings and conclusions based on our audit objectives.
We limited our review of the city’s internal controls to gaining an
understanding of the transaction flow and claim preparation process as
necessary to develop appropriate auditing procedures.
Objective, Scope,
and Methodology
City of Hayward Animal Adoption Program
-3-
Our audit found instances of noncompliance with the requirements
outlined in the Objective section. These instances are described in the
accompanying Summary of Program Costs (Revised Schedule 1) and in
the Revised Findings and Recommendations section of this report.
For the audit period, the City of Hayward claimed $2,363,283 for costs of
the Animal Adoption Program. Our audit found that $1,080,825 is
allowable and $1,282,458 is unallowable.
For the FY 1998-99 claim, the State paid the city $15,262. Our audit
found that $55,647 is allowable. The SCO’s LGPSD will send the city a
separate notification letter to resolve allowable costs in excess of the
amount paid, totaling $40,385. The letter will be sent within 30 days
from the issuance date of this report.
For the FY 1999-2000 claim, the State paid the city $284,582. Our audit
found that $285,034 is allowable. The SCO’s LGPSD will send the city a
separate notification letter to resolve allowable costs in excess of the
amount paid, totaling $452. The letter will be sent within 30 days from
the issuance date of this report.
For the FY 2000-01 claim, the State paid the city $192,239. Our audit
found that $191,787 is allowable. The SCO’s LGPSD will send the city a
separate notification letter to resolve the amount paid in excess of
allowable costs, totaling $452. This letter will be sent within 30 days from
the issuance date of this report.
For the FY 2001-02 and FY 2002-03 claims, our audit found that
$177,358 is allowable. The State paid this amount to the city.
For the FY 2005-06 claim, the State paid the city $104,181. Our audit
found that $120,490 is allowable. The SCO’s LGPSD will send the city
a separate notification letter to resolve allowable costs in excess of the
amount paid, totaling $16,309. The letter will be sent within 30 days
from the issuance date of this report.
For the FY 2006-07 claim, our audit found that $127,183 is allowable.
The State paid this amount to the city.
For the FY 2007-08 claim, the State made no payment to the city. Our
audit found that $123,326 is allowable. The SCO’s LGPSD will send the
city a separate notification letter to resolve allowable costs in excess of the
amount paid, totaling $123,326. The letter will be sent within 30 days
from the issuance date of this report.
The SCO issued a draft audit report on January 28, 2011. Susan M. Stark,
Interim Finance Director, responded by letter dated March 3, 2011,
disagreeing with the audit results for Findings 2 and 4, and the retroactive
application of an Appellate Court decision affecting Findings 2, 3, 8, and
9. The city did not respond to the other findings. We issued the final audit
report on May 6, 2011. The city subsequently filed an Incorrect Reduction
Claim (IRC) on March 8, 2012. Subsequently, we revised our audit report
to reinstate $56,694. We advised Dustin Claussen, Director of Finance, of
the revision on January 23, 2017.
Conclusion
Views of
Responsible
Officials
City of Hayward Animal Adoption Program
-4-
On January 11, 2017, the Commission issued a proposed decision in
response to the city’s filed IRC. In its proposed decision, the Commission
concluded that the city should receive partial reimbursement for certain
costs. The hearing on the proposed decision was set for January 27,
2017. However, on January 24, 2017, the city filed a Request to Withdraw
the IRC. The city withdrew the IRC because it came to an agreement with
the SCO to reinstate construction costs in FY 1998-99 and equipment
procurement costs in FY 2005-06. As a result, allowable costs for the audit
period increased by $56,694, from $1,024,131 to $1,080,825.
This report is solely for the information and use of the City of Hayward,
the California Department of Finance, and the SCO; it is not intended to
be and should not be used by anyone other than these specified parties.
This restriction is not intended to limit distribution of this report, which is
a matter of public record.
Original signed by
JEFFREY V. BROWNFIELD
Chief, Division of Audits
December 29, 2017
Restricted Use
Reason for
Reissuance
City of Hayward Animal Adoption Program
-5-
Revised Schedule 1—
Summary of Program Costs
July 1, 1998, through June 30, 2008
(Excluding July 1, 2003, through June 30, 2005)
Actual Costs Allowable Audit
Claimed per Audit Adjustments Reference 1
July 1, 1998, through June 30, 1999
Direct and indirect costs:
Policies and procedures 333$ 333$ -$
Training 486 486 -
Acquiring space and facilities 40,633 40,633 -
Care and maintenance of other animals 850 589 (261) Finding 3
Holding period 72,594 1,075 (71,519) Finding 4
Feral cats - 767 767 Finding 5
Lost and found lists 9,101 2,275 (6,826) Finding 6
Non-medical records 10,679 3,944 (6,735) Finding 7
Veterinary care 18,686 5,545 (13,141) Finding 8
Total program costs 153,362$ 55,647 (97,715)$
Less amount paid by the State (15,262)
Allowable costs claimed in excess of (less than) amount paid 40,385$
July 1, 1999, through June 30, 2000
Direct and indirect costs:
Training 4,093$ 4,093$ -$
Computer software 16,854 4,483 (12,371) Finding 1
Acquiring space and facilities 354,735 195,191 (159,544) Finding 2 (Revised)
Care and maintenance of dogs and cats 105,094 11,032 (94,062) Finding 3
Care and maintenance of other animals 1,529 1,027 (502) Finding 3
Holding period 138,657 43,824 (94,833) Finding 4
Feral cats - 1,495 1,495 Finding 5
Lost and found lists 9,768 5,145 (4,623) Finding 6
Non-medical records - 7,659 7,659 Finding 7
Veterinary care - 10,633 10,633 Finding 8
Procuring equipment - 452 452 Finding 9 (Revised)
Total program costs 630,730$ 285,034 (345,696)$
Less amount paid by the State (284,582)
Allowable costs claimed in excess of (less than) amount paid 452$
July 1, 2000, through June 30, 2001
Direct and indirect costs:
Training 260$ 260$ -$
Computer software 11,345 - (11,345) Finding 1
Acquiring space and facility 124,984 100,228 (24,756) Finding 2 (Revised)
Care and maintenance of dogs and cats 99,787 14,293 (85,494) Finding 3
Care and maintenance of other animals 1,715 467 (1,248) Finding 3
Holding period 148,621 47,594 (101,027) Finding 4
Feral cats - 1,279 1,279 Finding 5
Lost and found lists 11,859 5,545 (6,314) Finding 6
Non-medical records - 8,382 8,382 Finding 7
Veterinary care - 10,776 10,776 Finding 8
Procuring equipment - 2,963 2,963 Finding 9 (Revised)
Total direct and indirect costs 398,571 191,787 (206,784)
Less offsetting savings/reimbursements (6,897) - 6,897 Finding 10
Total program costs 391,674$ 191,787 (199,887)$
Less amount paid by the State (192,239)
Allowable costs claimed in excess of (less than) amount paid (452)$
Cost Elements
City of Hayward Animal Adoption Program
-6-
Revised Schedule 1 (continued)
Actual Costs Allowable Audit
Claimed per Audit Adjustments Reference 1
July 1, 2001, through June 30, 2002
Direct and indirect costs:
Training 1,157$ 1,157$ -$
Care and maintenance of dogs and cats 130,269 16,855 (113,414) Finding 3
Care and maintenance of other animals 3,122 1,381 (1,741) Finding 3
Holding period 169,216 48,633 (120,583) Finding 4
Feral cats - 1,828 1,828 Finding 5
Lost and found lists 18,900 5,665 (13,235) Finding 6
Non-medical records - 8,812 8,812 Finding 7
Veterinary care - 10,918 10,918 Finding 8
Total direct and indirect costs 322,664 95,249 (227,415)
Less offsetting savings/reimbursements (7,922) - 7,922 Finding 10
Total program costs 314,742$ 95,249 (219,493)$
Less amount paid by the State (95,249)
Allowable costs claimed in excess of (less than) amount paid -$
July 1, 2002, through June 30, 2003
Direct and indirect costs:
Training 588$ 588$ -$
Care and maintenance of dogs and cats 31,717 12,568 (19,149) Finding 3
Care and maintenance of other animals 1,667 1,398 (269) Finding 3
Holding period 117,533 41,338 (76,195) Finding 4
Feral cats 3,513 1,949 (1,564) Finding 5
Lost and found lists 23,934 5,893 (18,041) Finding 6
Non-medical records - 9,096 9,096 Finding 7
Veterinary care - 9,279 9,279 Finding 8
Total direct and indirect costs 178,952 82,109 (96,843)
Less offsetting savings/reimbursements (26,485) - 26,485 Finding 10
Total program costs 152,467$ 82,109 (70,358)$
Less amount paid by the State (82,109)
Allowable costs claimed in excess of (less than) amount paid -$
July 1, 2005, through June 30, 2006
Direct and indirect costs:
Training 522$ 522$ -$
Computer software 1,008 - (1,008) Finding 1
Care and maintenance of dogs and cats 42,261 18,844 (23,417) Finding 3
Care and maintenance of other animals 1,901 2,015 114 Finding 3
Holding period 104,216 46,920 (57,296) Finding 4
Feral cats 977 2,340 1,363 Finding 5
Lost and found lists 9,319 6,719 (2,600) Finding 6
Non-medical records 36,968 10,061 (26,907) Finding 7
Veterinary care 17,389 13,452 (3,937) Finding 8
Procuring equipment 19,617 19,617 - Finding 9 (Revised)
Total program costs 234,178$ 120,490 (113,688)$
Less amount paid by the State (104,181)
Allowable costs claimed in excess of (less than) amount paid 16,309$
Cost Elements
City of Hayward Animal Adoption Program
-7-
Revised Schedule 1 (continued)
Actual Costs Allowable Audit
Claimed per Audit Adjustments Reference 1
July 1, 2006, through June 30, 2007
Direct and indirect costs:
Training 152$ 152$ -$
Computer software 3,637 - (3,637) Finding 1
Care and maintenance of dogs and cats 46,362 32,788 (13,574) Finding 3
Care and maintenance of other animals 12,340 4,952 (7,388) Finding 3
Holding period 142,151 54,139 (88,012) Finding 4
Feral cats 931 2,496 1,565 Finding 5
Lost and found lists 10,790 7,710 (3,080) Finding 6
Non-medical records 15,301 12,600 (2,701) Finding 7
Veterinary care 21,792 12,346 (9,446) Finding 8
Total direct and indirect costs 253,456 127,183 (126,273)
Less offsetting savings/reimbursements - - -
Total program costs 253,456$ 127,183 (126,273)$
Less amount paid by the State (127,183)
Allowable costs claimed in excess of (less than) amount paid -$
July 1, 2007, through June 30, 2008
Direct and indirect costs:
Care and maintenance of dogs and cats 15,219$ 27,087$ 11,868$ Finding 3
Care and maintenance of other animals 925 2,111 1,186 Finding 3
Holding period 157,647 57,259 (100,388) Finding 4
Feral cats 3,382 2,056 (1,326) Finding 5
Lost and found lists 12,300 8,090 (4,210) Finding 6
Non-medical records 18,198 11,840 (6,358) Finding 7
Veterinary care 25,003 14,883 (10,120) Finding 8
Total program costs 232,674$ 123,326 (109,348)$
Less amount paid by the State -
Allowable costs claimed in excess of (less than) amount paid 123,326$
Summary: July 1, 1998, through June 30, 2008
(excluding FY 2003-04 and FY 2004-05)
Direct and indirect costs:
Policies and procedures 333$ 333$ -$
Training 7,258 7,258 -
Computer software 32,844 4,483 (28,361)
Acquiring space and facilities 520,352 336,052 (184,300)
Care and maintenance of dogs and cats 470,709 133,467 (337,242)
Care and maintenance of other animals 24,049 13,940 (10,109)
Holding period 1,050,635 340,782 (709,853)
Feral cats 8,803 14,210 5,407
Lost and found lists 105,971 47,042 (58,929)
Non-medical records 81,146 72,394 (8,752)
Veterinary care 82,870 87,832 4,962
Procuring equipment 19,617 23,032 3,415
Total direct and indirect costs 2,404,587 1,080,825 (1,323,762)
Less offsetting savings/reimbursements (41,304) - 41,304
Total program costs 2,363,283$ 1,080,825 (1,282,458)$
Less amount paid by the State 2
(900,805)
Allowable costs claimed in excess of (less than) amount paid 180,020$
Cost Elements
____________________ 1 See the Revised Findings and Recommendations section. 2 Payment information current as of October 12, 2017.
City of Hayward Animal Adoption Program
-8-
Schedule 2—
Summary of Care and Maintenance Costs
July 1, 1998, through June 30, 2008
(Excluding July 1, 2003, through June 30, 2005)
Allowable per Audit1
Category
Actual Costs
Claimed1, 4
Salaries and
Benefits2
Materials
and Supplies
Audit
Adjust-
ments
July 1, 1998, through June 30, 1999
Care and maintenance of other “eligible” animals: Total care and maintenance costs $ 62,065 $ 209,718 $ 69,780 Total annual census ÷ 2,190 ÷ 76,830 ÷ 76,830
Cost per “eligible” animal per day $28.34 $2.73 $0.91 Number of other “eligible” animals × 7.5 × 54 × 54 Reimbursable days3 × 4 × 3 × 3
Total care and maintenance costs for other “eligible” animals $ 850 $ 442 $ 147 $ (261)
July 1, 1999, through June 30, 2000
Care and maintenance of dogs and cats: Total care and maintenance costs $ 2,161,262 $ 173,631 $ 69,780 Percentage of dogs and cats to total animals × 94.96% × 91.94% × 91.94%
Total care and maintenance costs for dogs and cats 2,052,334 159,636 64,156 Total dog and cat kennel days ÷ 78,739 ÷ 70,641 ÷ 70,641
Cost per dog and cat per day $26.06 $2.26 $0.91 Number of eligible dogs and cats × 2,016 × 1,160 × 1,160 Reimbursable days × 2 × 3 × 3
Total care and maintenance costs for dogs and cats 105,094 7,865 3,167 $ (94,062)
Care and maintenance of other “eligible” animals: Total care and maintenance costs 2,161,262 173,631 69,780 Percentage of other “eligible” animals to total animals × 5.04% × 8.06% × 8.06%
Total care and maintenance costs for other “eligible” animals 108,928 13,995 5,624 Total other “eligible” animal kennel days ÷ 21,375 ÷ 6,189 ÷ 6,189
Cost per other “eligible” animal per day $5.10 $2.26 $0.91 Number of other “eligible” animals × 75 × 54 × 54 Reimbursable days × 4 × 6 × 6
Total care and maintenance costs for other “eligible” animals 1,529 732 295 (502)
Total care and maintenance costs $ 106,623 $ 8,597 $ 3,462 $ (94,564)
July 1, 2000, through June 30, 2001
Care and maintenance of dogs and cats: Total care and maintenance costs $ 345,325 $ 179,297 $ 69,780 Percentage of dogs and cats to total animals × 96.94% × 94.11% × 94.11%
Total care and maintenance costs for dogs and cats 334,758 168,736 65,670 Total dog and cat kennel days ÷ 13,922 ÷ 57,206 ÷ 57,206
Cost per dog and cat per day $24.04 $2.95 $1.15 Number of eligible dogs and cats × 2,075 × 1,162 × 1,162 Reimbursable days × 2 × 3 × 3
Total care and maintenance costs for dogs and cats 99,787 10,284 4,009 $ (85,494)
City of Hayward Animal Adoption Program
-9-
Schedule 2 (continued)
Allowable per Audit1
Category
Actual Costs
Claimed1, 4
Salaries and
Benefits2
Materials
and Supplies
Audit
Adjust-
ments
July 1, 2000, through June 30, 2001 (continued)
Care and maintenance of other “eligible” animals: Total care and maintenance costs $ 345,325 $ 179,297 $ 69,780 Percentage of other “eligible” animals to total animals × 3.06% × 5.89% × 5.89%
Total care and maintenance costs for other “eligible” animals 10,567 10,561 4,110 Total other “eligible” animal kennel days ÷ 1,947 ÷ 3,583 ÷ 3,583
Cost per other “eligible” animal per day $5.43 $2.95 $1.15 Number of other “eligible” animals × 79 × 19 × 19 Reimbursable days × 4 × 6 × 6
Total care and maintenance costs for other “eligible” animals 1,715 336 131 (1,248)
Total care and maintenance costs $ 101,502 $ 10,620 $ 4,140 $ (86,742)
July 1, 2001, through June 30, 2002
Care and maintenance of dogs and cats: Total care and maintenance costs Unknown $ 228,023 $ 69,780 Percentage of dogs and cats to total animals Unknown × 91.03% × 91.03%
Total care and maintenance costs for dogs and cats Unknown 207,569 63,521 Total dog and cat kennel days Unknown ÷ 65,986 ÷ 65,986
Cost per dog and cat per day $28.05 $3.15 $0.96 Number of eligible dogs and cats × 2,322 × 1,367 × 1,367 Reimbursable days × 2 × 3 × 3
Total care and maintenance costs for dogs and cats 130,269 12,918 3,937 $ (113,414)
Care and maintenance of other “eligible” animals: Total care and maintenance costs Unknown $ 228,023 $ 69,780 Percentage of other “eligible” animals to total animals Unknown × 8.97% × 8.97%
Total care and maintenance costs for other “eligible” animals Unknown 20,454 6,259 Total other “eligible” animal kennel days Unknown ÷ 6,506 ÷ 6,506
Cost per other “eligible” animal per day $7.50 $3.15 $0.96 Number of other “eligible” animals × 104 × 56 × 56 Reimbursable days × 4 × 6 × 6
Total care and maintenance costs for other “eligible” animals 3,122 1,058 323 (1,741)
Total care and maintenance costs $ 133,391 $ 13,976 $ 4,260 $ (115,155)
July 1, 2002, through June 30, 2003
Care and maintenance of dogs and cats: Total care and maintenance costs $ 267,443 $ 288,976 $ 69,780 Percentage of dogs and cats to total animals × 96.89% × 95.13% × 95.13%
Total care and maintenance costs for dogs and cats 259,121 274,903 66,382 Total dog and cat kennel days ÷ 24,820 ÷ 73,283 ÷ 73,283
Cost per dog and cat per day $10.44 $3.75 $0.91 Number of eligible dogs and cats × 1,519 × 899 × 899 Reimbursable days × 2 × 3 × 3
Total care and maintenance costs for dogs and cats 31,717 10,114 2,454 (19,149)
City of Hayward Animal Adoption Program
-10-
Schedule 2 (continued)
Allowable per Audit1
Category
Actual Costs
Claimed1, 4
Salaries and
Benefits2
Materials
and Supplies
Audit
Adjust-
ments
July 1, 2002, through June 30, 2003 (continued)
Care and maintenance of other “eligible” animals: Total care and maintenance costs 267,443 $ 288,976 $ 69,780 Percentage of other “eligible” animals to total animals × 3.11% × 4.87% × 4.87%
Total care and maintenance costs for other “eligible” animals 8,323 14,073 3,398 Total other “eligible” animal kennel days ÷ 1,278 ÷ 3,748 ÷ 3,748
Cost per other “eligible” animal per day $6.51 $3.75 $0.91 Number of other “eligible” animals × 64 × 50 × 50 Reimbursable days × 4 × 6 × 6
Total care and maintenance costs for other “eligible” animals 1,667 1,125 $ 273 (269)
Total care and maintenance costs $ 33,384 $ 11,239 $ 2,727 $ (19,418)
July 1, 2005, through June 30, 2006
Care and maintenance of dogs and cats: Total care and maintenance costs $ 429,269 $ 394,992 $ 59,233 Percentage of dogs and cats to total animals × 90.28% × 88.45% × 88.45%
Total care and maintenance costs for dogs and cats 387,544 349,370 52,392 Total dog and cat kennel days ÷ 26,190 ÷ 84,890 ÷ 84,890
Cost per dog and cat per day $14.80 $4.11 $0.62 Number of eligible dogs and cats × 1,428 × 1,328 1,328 Reimbursable days × 2 × 3 × 3
Total care and maintenance costs for dogs and cats 42,261 16,374 2,470 $ (23,417)
Care and maintenance of other “eligible” animals: Total care and maintenance costs 429,269 394,992 59,233 Percentage of other “eligible” animals to total animals × 9.72% × 11.55% × 11.55%
Total care and maintenance costs for other “eligible” animals 41,725 45,622 6,841 Total other “eligible” animal kennel days ÷ 22,561 ÷ 11,087 ÷ 11,087
Cost per other “eligible” animal per day $1.85 $4.11 $0.62 Number of other “eligible” animals × 257 × 71 × 71 Reimbursable days × 4 × 6 × 6
Total care and maintenance costs for other “eligible” animals 1,901 1,751 264 114
Total care and maintenance costs $ 44,162 $ 18,125 $ 2,734 $ (23,303)
July 1, 2006, through June 30, 2007
Care and maintenance of dogs and cats: Total care and maintenance costs $ 508,117 $ 605,864 $ 89,812 Percentage of dogs and cats to total animals × 91.77% × 91.73% × 91.73%
Total care and maintenance costs for dogs and cats 466,294 555,759 82,385 Total dog and cat kennel days ÷ 21,765 ÷ 70,338 ÷ 70,338
Cost per dog and cat per day $21.42 $7.90 $1.17 Number of eligible dogs and cats × 1,082 × 1,205 × 1,205 Reimbursable days × 2 × 3 × 3
Total care and maintenance costs for dogs and cats 46,362 28,558 4,230 $ (13,574)
City of Hayward Animal Adoption Program
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Schedule 2 (continued)
Allowable per Audit1
Category
Actual Costs
Claimed1, 4
Salaries and
Benefits2
Materials
and Supplies
Audit
Adjust-
ments
July 1, 2006, through June 30, 2007 (continued)
Care and maintenance of other “eligible” animals: Total care and maintenance costs 508,117 605,864 89,812 Percentage of other “eligible” animals to total animals × 8.23% × 8.27% × 8.27%
Total care and maintenance costs for other “eligible” animals 41,823 50,105 7,427 Total other “eligible” animal kennel days ÷ 1,952 ÷ 6,338 ÷ 6,338
Cost per other “eligible” animal per day $21.42 $7.90 $1.17 Number of other “eligible” animals × 144 × 91 × 91 Reimbursable days × 4 × 6 × 6
Total care and maintenance costs for other “eligible” animals 12,340 4,313 639 (7,388)
Total care and maintenance costs $ 58,702 $ 32,871 $ 4,869 $ (20,962)
July 1, 2007, through June 30, 2008
Care and Maintenance of Dogs and Cats: Total care and maintenance costs $ 516,069 $ 620,142 $ 83,763 Percentage of dogs and cats to total animals × 94.601% × 92.47% × 92.47%
Total care and maintenance costs for dogs and cats 488,206 573,445 77,456 Total dog and cat kennel days ÷ 72,562 ÷ 72,140 ÷ 72,140
Cost per dog and cat per day $6.73 $7.95 $1.07 Number of eligible dogs and cats × 1,131 × 1,001 × 1,001 Reimbursable days × 2 × 3 × 3
Total care and maintenance costs for dogs and cats 15,219 23,874 3,213 $ 11,868
Care and maintenance of other “eligible” animals: Total care and maintenance costs 516,069 620,142 83,763 Percentage of other “eligible” animals to total animals × 5.40% × 7.53% × 7.53%
Total care and maintenance costs for other “eligible” animals 27,863 46,697 6,307 Total other “eligible” animal kennel days ÷ 4,098 ÷ 5,872 ÷ 5,872
Cost per other “eligible” animal per day $6.80 $7.95 $1.07 Number of other “eligible” animals × 34 × 39 × 39 Reimbursable days × 4 × 6 × 6
Total care and maintenance costs for other “eligible” animals 925 1,861 250 1,186
Total care and maintenance costs $ 16,144 $ 25,735 $ 3,463 $ 13,054
Summary: July 1, 1998, through June 30, 2003 and
July 1, 2005, through June 30, 2008
Care and maintenance of dogs and cats $ 470,709 $ 109,987 $ 23,480 $ (337,242)
Care and maintenance of other “eligible” animals 24,049 11,618 2,322 (10,109)
Total care and maintenance costs $ 494,758 $ 121,605 $ 25,802 $ (347,351)
_________________________
1 Minor calculation variances occur due to rounding of the percentages/amounts to two decimal points.
2 Includes related indirect costs.
3 Costs were reimbursable for other animals beginning on January 1, 1999. Therefore, the number of reimbursable
days was changed from six days to three days. Costs of dogs and cats were not reimbursable until July 1, 1999.
4 Difference due to rounding.
City of Hayward Animal Adoption Program
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Revised Findings and Recommendations
The city claimed $32,844 to procure computer software. We determined
that $4,483 is allowable, and $28,361 is unallowable: $9,491 is
unallowable, $10,405 was reclassified to the Non-Medical Records cost
component (see Finding 7), and $8,465 was reclassified to the Procuring
Equipment cost component (see Finding 9).
The following table summarizes the claimed, allowable, and unallowable
costs for the audit period by fiscal year:
Category
Fiscal Year
Amount
Claimed
Amount
Allowable
Audit
Adjustment
Salaries and benefits:
1999-2000 $ 650 $ 650 $ —
Total salaries and benefits 650 650 —
Related indirect costs:
1999-2000 120 120 —
Total related indirect costs 120 120 —
Materials and supplies:
1999-2000 16,084 3,713 (12,371)
2000-01 11,345 — (11,345)
Total materials and supplies 27,429 3,713 (23,716)
Contract services:
2005-06 1,008 — (1,008)
2006-07 3,637 — (3,637)
Total contract services 4,645 3,713 (4,645)
Total $ 32,844 $ 4,483 $ (28,361)
Salaries and Benefits
The city claimed $650 in salaries and benefits for FY 1999-2000 and $120
in related indirect costs. The costs were incurred for the Animal Shelter
Manager to research various computer software systems and negotiate
with the vendor. We determined that these costs are allowable.
Overstated/Misclassified Materials and Supplies
The city claimed $27,429 in material and supply costs ($16,084 for FY
1999-2000 and $11,345 for FY 2000-01). We determined that $3,713 was
allowable, $9,491 was unallowable, $5,760 was reclassified to the Non-
Medical Records cost component, and $8,465 was reclassified to the
Procuring Equipment cost component.
In FY 1999-2000, the city acquired the Chameleon software system for its
animal shelter operations and paid fees totaling $10,609. The city included
the entire amount in its claim. However, the city determined that only 35%
of the software system was used for mandated activities. Accordingly,
$3,713 of the initial fee is reimbursable as the pro rata share applicable to
the mandated program and the remaining $6,896 is unallowable.
The unallowable costs occurred because the city claimed training costs
twice ($2,400), claimed unsupported costs ($195), and claimed costs
greater than the pro rata share for software acquisition costs ($6,896). The
FINDING 1—
Unallowable and
misclassified computer
software costs
City of Hayward Animal Adoption Program
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unallowable training costs were already claimed and allowable under the
cost component of training for FY 1999-2000. The $195 of unsupported
costs appears to be a calculation error made in the city’s claim for
FY 1999-2000.
The misclassified costs occurred because the city claimed annual licensing
fees of $2,880 for both FY 1999-2000 and FY 2000-01 under this cost
component that should have been claimed under the cost component of
Non-Medical Records. In addition, the city claimed $8,465 for the
purchase of computer equipment under this cost component for
FY 2000-01 that should have been claimed under the cost component of
Procuring Equipment.
Misclassified Contract Services
The city claimed $4,645 in contract services costs ($1,008 for FY 2005-06
and $3,637 for FY 2006-07) under this cost component. We determined
that these costs should have been claimed under the cost component of
Non-Medical Records.
The parameters and guidelines (Section IV.A.3–One Time Activities)
identify the following one-time reimbursable activity:
Develop or procure computer software for the maintenance of records on
animals specified in Section IV (B) (8). If the computer software is
utilized in some way that is not directly related to the maintenance of
records specified in Section IV (B) (8), only the pro rata portion of the
activity that is used for compliance with Section IV (B) (8) is
reimbursable.
Recommendation
The Animal Adoption Program was suspended in the FY 2010-11 through
FY 2017-18 Budget Acts. If the program becomes active again, we
recommend that the city ensure that claimed costs include only eligible
costs, are based on actual costs, and are properly supported.
City of Hayward Animal Adoption Program
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The city claimed $520,352 under this cost component. We found that
$336,052 is allowable and $184,300 is unallowable. The misstated costs
occurred because the city claimed reimbursement using pro-rata
percentages that were misstated, claimed ineligible and unsupported costs,
misclassified costs, and understated allowable costs.
Allowable costs for this cost component are based on a formula that
includes all costs incurred by the city applicable to animal shelter
construction multiplied by a ratio of animals euthanized after the required
holding period, to the number of animals housed at the shelter during the
required holding period. We made adjustments to gross construction costs
incurred and the pro rata animal population information.
The following table summarizes the claimed, allowable, and unallowable
costs for the audit period by fiscal year:
Category
Fiscal Year
Amount
Claimed
Amount
Allowable
Audit
Adjustment
Salaries and benefits:
1999-2000 $ 2,206 $ 2,206 $ —
2000-01 2,069 2,069 —
Total salaries and benefits 4,275 4,275 —
Related indirect costs:
1999-2000 408 408 —
2000-01 412 412 —
Total related indirect costs 820 820 —
Materials and supplies:
1998-99 40,633 40,633 —
1999-2000 352,121 192,577 (159,544)
2000-01 122,503 97,747 (24,756)
Total materials and supplies 515,257 330,957 (184,300)
Total $ 520,352 $ 336,052 $ (184,300)
Background—Construction of Additional Shelter Space
On November 9, 1999, the City Council approved plans and specifications
for construction of 6,700 square feet of additional kennel space, an
adoption gallery, a night deposit area, a get-acquainted room, and
grooming and laundry rooms. The project also included an outside
concrete pad for the freezer unit and filling the existing loading ramp to
provide better access and additional parking spaces. On January 4, 2000,
the city awarded the project to Sevan Construction, Inc. of San Mateo in
the amount of $869,000. Additional costs budgeted for the project
included $140,000 for city-furnished equipment (cages, kennels, etc.),
$135,000 for design and administration, and $76,000 for inspection. The
total estimated costs for the project were $1,200,000. The project was
completed during FY 2000-01.
REVISED
FINDING 2—
Overstated space and
facilities acquisition
costs
City of Hayward Animal Adoption Program
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Construction Costs Incurred
Costs incurred for construction were adjusted for the following reasons:
The city applied offsetting revenues totaling $64,550 against gross
construction costs for FY 2000-01. We determined that no offset was
required.
The city did not use the correct pro rata representation of impounded
stray or abandoned dogs, cats, and other animals held during the
increased holding period that died or were ultimately euthanized to the
total population of animals housed in the facility during the required
holding period.
Overstated Materials and Supplies
Gross Construction Costs
Gross construction costs incurred were adjusted upwards by $64,550 for
FY 2000-01. The city applied offsetting revenues totaling $64,550 against
gross construction costs incurred totaling $354,155. We determined that
no offset was required.
Pro Rata Representation of Animals
The parameters and guidelines adopted on February 28, 2002, state that
reimbursement is based on the number of animals that “die during the
increased holding period or are ultimately euthanized (numerator) to the
total population of animals housed at the facility (denominator).” For the
purposes of this calculation, the term “animals that are held and die during
the increased holding period” means that they died of natural causes and
the term “are ultimately euthanized” means only animals that were
euthanized after the required holding period.
The parameters and guidelines (Section III–Period of Reimbursement)
also state that costs incurred for Food and Agriculture Code sections 31108
(stray dogs) and 31752 (stray cats), as amended by Statutes of 1998,
Chapter 752, are eligible for reimbursement on or after July 1, 1999.
We used the animal census data that was provided by the city to determine
the total number of animals housed at the facility during the required
holding period, the number of stray and abandoned animals that died of
natural causes during the required holding period, and the number of stray
and abandoned animals that were ultimately euthanized after the required
holding period.
For FY 1998-99, we determined that the city’s materials and supplies were
allowable as claimed.
For FY 1999-2000, we used an average of the last six years of the audit
period to determine both the number of eligible animals (the number of
eligible euthanized or dead dogs, cats, and other animals) and the total
population of animals (total number of animals that came into the shelter,
excluding those dead on arrival). We used an average because the shelter’s
animal database information for FY 1999-2000 was incomplete.
City of Hayward Animal Adoption Program
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For FY 2000-01, we extracted the required animal census data from the
city’s Chameleon software system database.
Based on the changes that we made to the pro rata percentages of animals,
the following table summarizes the claimed and allowable materials and
supplies costs by fiscal year:
Fiscal Year
Eligible
No. of
Animals
Total
No. of
Animals Ratio
Total
Construction
Costs
Reimburs-
able Amount
Claimed:
1998-99 — — 100.00% $ 40,633 $ 40,633
1999-2000 2,091 4,177 50.10% 702,837 352,121
2000-01 2,075 4,908 42.30% 289,605 122,503
Total claimed costs 1,033,075 515,257
Allowable:
1998-99 4,431 4,431 100.00% 40,633 40,633
1999-2000 1,214 4,431 27.40% 702,837 192,577
2000-01 1,181 4,279 27.60% 354,155 97,747
Total allowable costs $1,097,625 330,957
Audit adjustment $ (184,300)
The program’s parameters and guidelines (Section IV.B.1–Acquisition of
Additional Space and/or Construction of New Facilities) identify the
following reimbursable activities:
Beginning January 1, 1999 – acquiring additional space by purchase or
lease and/or construction of new facilities to provide appropriate or
adequate shelter necessary to comply with the mandated activities during
the increased holding period for impounded stray or abandoned dogs,
cats, and other animals specified in Statutes of 1998, Chapter 752 that
die during the increased holding period or are ultimately euthanized.
Eligible claimants are entitled to reimbursement for the proportionate
share of actual costs required to plan, design, acquire, and/or build
facilities in a given fiscal year based on the pro rata representation of
impounded stray or abandoned dogs, cats, and other animals specified in
Statutes of 1998, Chapter 752 that are held during the increased holding
period specified in Sections IV (B) (3) and (4) of these parameters and
guidelines and die during the increased holding period or are ultimately
euthanized, to the total population of animals housed in the facility. The
population of animals housed in the facilities includes those animals that
are excluded from reimbursement, as specified in Sections IV (B)(3) and
(4) of these parameters and guidelines during the entire holding period
required by Food and Agriculture Code sections 31108, 31752, and
31753.
Recommendation
The Animal Adoption Program was suspended in the FY 2010-11 through
FY 2017-18 Budget Acts. If the program becomes active again, we
recommend that the city ensure that claimed costs include only eligible
costs, are based on actual costs, and are properly supported.
City of Hayward Animal Adoption Program
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The city claimed $494,758 during the audit period for the care and
maintenance of stray and abandoned animals ($470,709 for dogs and cats
and $24,049 for other animals) that died during the increased holding
period or were ultimately euthanized. We determined that $147,407 was
allowable and $347,351 was unallowable. The costs are unallowable
because the city misstated animal census data, co-mingled costs for
veterinary care and lost-and-found lists within the actual cost formula, and
claimed salaries and benefits costs for ineligible employees. We also
determined that the city understated costs for food and supplies and
salaries and benefits.
The following table summarizes the claimed, allowable, and unallowable
care and maintenance costs for the audit period separately for dogs and
cats and other animals by fiscal year. Refer to Schedule 2 (Summary of
Care and Maintenance Costs) for further details.
Dogs and Cats Other Animals
Fiscal Year Claimed Allowable Adjustment Claimed Allowable Adjustment
1998-99 $ — $ — $ — $ 850 $ 589 $ (261)
1999-2000 105,094 11,032 (94,062) 1,529 1,027 (502)
2000-01 99,787 14,293 (85,494) 1,715 467 (1,248)
2001-02 130,269 16,855 (113,414) 3,122 1,381 (1,741)
2002-03 31,717 12,568 (19,149) 1,667 1,398 (269)
2005-06 42,261 18,844 (23,417) 1,901 2,015 114
2006-07 46,362 32,788 (13,574) 12,340 4,952 (7,388)
2007-08 15,219 27,087 11,868 925 2,111 1,186
Total $ 470,709 $ 133,467 $ (337,242) $ 24,049 $ 13,940 $ (10,109)
The following table summarizes the combined claimed, allowable, and
unallowable costs for the care and maintenance cost component for the
audit period:
Combined Dogs, Cats, and Other Animals
Fiscal Year Claimed Allowable Adjustment
1998-99 $ 850 $ 589 $ (261)
1999-2000 106,623 12,059 (94,564)
2000-01 101,502 14,760 (86,742)
2001-02 133,391 18,236 (115,155)
2002-03 33,384 13,966 (19,418)
2005-06 44,162 20,859 (23,303)
2006-07 58,702 37,740 (20,962)
2007-08 16,144 29,198 13,054
Total $ 494,758 $ 147,407 $ (347,351)
The parameters and guidelines (section IV.B.3–Care and Maintenance for
Impounded Stray and Abandoned Dogs and Cats that Die During the
Increased Holding Period or are Ultimately Euthanized) identify the
following reimbursable activities:
Beginning July 1, 1999, for providing care and maintenance during the
increased holding period for impounded stray or abandoned dogs and
cats that die during the increased holding period or are ultimately
euthanized. The increased holding period shall be measured by
calculating the difference between the days from the day of capture and
four or six business days from the day after impoundment.
The parameters and guidelines (section IV.B.4–Care and Maintenance for
Impounded Stray or Abandoned Animals Specified in Food and
FINDING 3—
Unallowable care and
maintenance costs
City of Hayward Animal Adoption Program
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Agriculture Code Section 31753 that Die During the Increased Holding
Period or are Ultimately Euthanized) identify the following reimbursable
activities:
Beginning on January 1, 1999 for providing care and maintenance for
stray or abandoned animals (specified in Food and Agriculture Code
Section 31753) the die during the increased holding period or are
ultimately euthanized.
Eligible claimants are not entitled to reimbursement for the care and
maintenance of the following population of dogs, cats, and other animals:
Stray or abandoned dogs, cats, and other animals that are irremediably
suffering from a serious illness or severe injury;
Newborn stray or abandoned dogs, cats, and other animals that need
maternal care and have been impounded without their mothers;
Stray or abandoned dogs, cats, and other animals too severely injured
to move or where a veterinarian is not available and it would be more
humane to dispose of the animal;
Owner-relinquished dogs, cats, and other animals; and
Stray or abandoned dogs, cats, and other animals that are ultimately
redeemed, adopted, or released to a nonprofit animal rescue or adoption
organization.
The parameters and guidelines state that claimants may elect to use either
the Actual Cost Method or the Time Study Method to claim costs for the
care and maintenance of impounded stray or abandoned dogs, cats, and
other animals that die during the increased holding period or are ultimately
euthanized. The city elected to use the actual cost method to claim these
costs.
The parameters and guidelines specify the following steps for claiming
costs using the Actual Cost Method:
Actual Cost Method – Under the actual cost method, actual reimbursable
care and maintenance costs per animal per day are computed for an
annual claim period, as follows:
a) Determine the total annual cost of care and maintenance for all dogs,
cats and other animals impounded at a facility. Total cost of care and
maintenance includes labor, materials, supplies, indirect costs, and
contract services.
b) Determine the average daily census of all dogs, cats and other
animals. For purposes of claiming reimbursement under IV.B.3,
average daily census is defined as the average number of all dogs and
cats at a facility housed on any given day, in 365-day period and the
average number of all other animals at a facility housed on any given
day in a 365-day period.
c) Multiply the average daily census of dogs, cats and other animals by
365 to calculate the yearly census of dogs and cats and the yearly
census of other animals.
City of Hayward Animal Adoption Program
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d) Divide the total annual cost of care by the yearly census of dogs and
cats to calculate the cost per dog and cat per day and by the yearly
census of other animals to calculate the cost per other animal per day.
e) Multiply the cost per animal per day by the number of impounded
stay or abandoned dogs, cats, and other animals that die during the
increase holding period, or are ultimately euthanized, by each
reimbursable day.
Reimbursable days for dogs and cats is the difference between three
days from the day of capture, and four or six business days from the
day after impoundment. The reimbursable days for other animals are
four or six business days from the day after impoundment.
Care and Maintenance Formula
The city elected to use the Actual Cost Method to claim costs; the
parameters and guidelines provide for a formula-driven methodology to
determine allowable mandated costs for the care and maintenance of dogs,
cats, and other animals. The use of this method requires claimants to
calculate the total amount of eligible costs incurred to provide care and
maintenance for the animals housed in its shelter. This total is divided by
the annual census of animals housed in the shelter to determine a cost per
animal per day.
The next element of the formula is adding the number of stray and
abandoned animals that died of natural causes during the holding period
plus those animals that were euthanized after the required holding period.
This total number of animals is then multiplied by the cost per animal per
day. The resulting amount represents allowable costs for providing care
and maintenance. Our calculations took into consideration that the
required holding period does not include Saturday as a business day. This
is consistent with an Appellate Court decision dated March 26, 2010.
The mandate reimburses claimants for costs associated with animals that
were not relinquished, redeemed, adopted, or released to a nonprofit
agency—animals for which the local agency was unable to assess fees to
recover such costs.
Costs incurred by the city for care and maintenance consisted of salaries
and benefits, materials and supplies, and related indirect costs. We made
adjustments to the costs incurred by the city and to the animal data that
was used to claim costs. As a result, we adjusted the costs per animal per
day.
The table in Schedule 2 summarizes the changes made to claimed costs for
animal care and maintenance. These changes consisted of changes to total
annual costs incurred by the city for animal care and maintenance (salaries,
benefits, indirect costs, and services and supplies) and animal census data
used to determine the cost per animal per day. The table also shows
changes to the number of eligible animals and the number of reimbursable
days that were used to determine reimbursable costs for each year of the
audit period.
City of Hayward Animal Adoption Program
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Labor—Salaries, Benefits, and Related Indirect Costs
For all years of the audit period, the city claimed 80% of labor costs
incurred for its full-time animal care attendants as time spent on care and
maintenance. The city did so in consideration of the fact that costs for these
employees were also included in other components of the city’s claims.
We determined that the 80% amount claimed is reasonable. However, the
city should have also included 80% of actual salaries paid to part-time
animal care attendants in the computation of labor costs.
The city also claimed 30% of labor costs incurred for the Senior Animal
Care Attendant/Animal Care Attendant Supervisor Position. The main
duty of this employee classification is to provide supervisory assistance to
animal care attendants. We concluded that the city did not support that the
employee in this classification spent 30% of his time performing care and
maintenance activities. Accordingly, all costs claimed for supervisory
Animal Care Attendant positions are unallowable.
Materials and Supplies
Food
The city has a contract with a supplier that provides animal food to the
shelter for a specified amount per year. The city determined its costs to be
$8,752 per year for FY 2005-06 through FY 2007-08. However, the city’s
shelter staff was able to compile additional invoices for food that were not
claimed. We determined that additional costs totaling $23,470 are
allowable ($3,329 for FY 2005-06, $14,127 for FY 2006-07, and $6,014
for FY 2007-08); these costs will be included in the materials and supplies
portion of the actual cost formula.
Supplies
The city claimed $27,800 for supplies in every year of the audit period as
“other stuff.” This amount was based on estimates and is unallowable.
During the audit, shelter staff was able to compile invoices to adequately
support costs incurred for supplies in the total amount of $183,083
($47,152 for FY 2005-06, $66,933 for FY 2006-07, and $68,997 for FY
2007-08). We included these costs in the materials and supplies portion of
the actual cost formula.
We used the average amount of supplies for these three years ($61,028) as
the allowable cost for supplies in the actual cost formulas for all five earlier
years of the audit period.
The following table summarizes the claimed and allowable costs for
materials and supplies:
Food Supplies
Fiscal Year Claimed Allowable Adjustment Claimed Allowable Adjustment
1998-99 Unknown $ 8,752 $ 8,752 Unknown $ 61,028 $ 61,028
1999-2000 Unknown 8,752 8,752 Unknown 61,028 61,028
2000-01 Unknown 8,752 8,752 Unknown 61,028 61,028
2001-02 Unknown 8,752 8,752 Unknown 61,028 61,028
2002-03 Unknown 8,752 8,752 Unknown 61,028 61,028
2005-06 Unknown 12,081 12,081 36,552 47,152 10,600
2006-07 Unknown 22,879 22,879 36,552 66,933 30,381
2007-08 Unknown 14,766 14,766 36,552 68,997 32,445
Total $ — $ 93,486 $ 93,486 $ 109,656 $ 488,222 $ 378,566
City of Hayward Animal Adoption Program
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Commingled Costs
For FY 1999-2000 through FY 2002-03, the city included the costs of
veterinary care related to the performance of initial physical exams and
administration of wellness vaccinations into its actual cost formulas for
care and maintenance. These costs are not reimbursable under this cost
component and were removed from the actual cost formulas for those
years.
Annual Census Data
The yearly census refers to the total number of days that all animals were
housed in the shelter. The actual cost formula requires the eligible cost of
care to be divided by the yearly census to arrive at an average cost per
animal per day. The cost per animal per day is then multiplied by the
eligible number of animals and the number of increased days.
We determined the eligible number of animals to apply to the actual cost
formula for all years of the audit period. We consistently applied the
exclusions per the parameters and guidelines to the raw animal data
provided by the animal shelter.
We applied costs per animal per day to the eligible number of dogs and
cats impounded at the city’s shelter for the two additional days required
by the mandated program. We also applied costs per animal per day to the
eligible number of “other animals” for all five days of the required holding
period.
Increased Holding Period
A recent Appellate Court ruling in the case of Purifoy v. Howell
determined that Saturday is not considered a business day for the purposes
of this mandated program. Therefore, we determined that the increased
holding period for dogs and cats changed from two days to three days and
the increased holding period for other animals increased from five days to
six days.
Recommendation
The Animal Adoption Program was suspended in the FY 2010-11 through
FY 2017-18 Budget Acts. If the program becomes active again, we
recommend that the city ensure that claimed costs include only eligible
costs, are based on actual costs, and are properly supported.
The city claimed $1,050,635 for the Holding Period component during the
audit period. We determined that $340,782 is allowable and $709,853 is
unallowable. The unallowable costs occurred because the city claimed
employee classifications that were not reimbursable. The city also did not
account for the animal shelter being closed on the last Saturday of the
month in the last four years of the audit period. For these years, we allowed
costs for the shelter being open an additional hour on 12 Wednesdays per
year.
FINDING 4—
Unallowable holding
period costs
City of Hayward Animal Adoption Program
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The following table summarizes the claimed, allowable, and unallowable
holding period costs separately for salaries and benefits and related
indirect costs for the audit period by fiscal year:
Salaries and Benefits Indirect Costs
Fiscal Year Claimed Allowable Adjustment Claimed Allowable Adjustment
1998-99 $ 58,686 $ 869 $ (57,817) $ 13,908 $ 206 $ (13,702)
1999-2000 117,010 36,982 (80,028) 21,647 6,842 (14,805)
2000-01 123,954 39,695 (84,259) 24,667 7,899 (16,768)
2001-02 141,367 40,629 (100,738) 27,849 8,004 (19,845)
2002-03 101,147 35,575 (65,572) 16,386 5,763 (10,623)
2005-06 89,653 40,363 (49,290) 14,563 6,557 (8,006)
2006-07 110,520 42,092 (68,428) 31,631 12,047 (19,584)
2007-08 138,490 49,878 (88,612) 19,157 7,381 (11,776)
Total $ 880,827 $ 286,083 $ (594,744) $ 169,808 $ 54,699 $ (115,109)
The following table summarizes total claimed, allowable, and unallowable
costs for the Holding Period cost component by fiscal year:
Salaries, Benefits, and Indirect Costs
Fiscal Year Claimed Allowable Adjustment
1998-99 $ 72,594 $ 1,075 $ (71,519)
1999-2000 138,657 43,824 (94,833)
2000-01 148,621 47,594 (101,027)
2001-02 169,216 48,633 (120,583)
2002-03 117,533 41,338 (76,195)
2005-06 104,216 46,920 (57,296)
2006-07 142,151 54,139 (88,012)
2007-08 157,647 57,259 (100,388)
Total $ 1,050,635 $ 340,782 $ (709,853)
The parameters and guidelines (Section IV.B.5–Agencies Using the
Holding Period of Four Business Days after the Day of Impoundment)
identify the following reimbursable activities:
Beginning July 1, 1999, for impounded dogs and cats, and beginning
January 1, 1999, for the impounded animals specified in Food and
Agriculture Code section 31753 (“other animals”), for either:
1. Making the animal available for owner redemption on one weekday
evening until at least 7:00 p.m., or one weekend day; or
2. For those local agencies with fewer than three full time employees or
that are not open during all regular weekday business hours,
establishing a procedure to enable owner to reclaim their animals by
appointment at a mutually agreeable time when the agency would
otherwise be closed.
Hours of Operation
The city’s current Notice of Impoundment (NOI) shows the hours of
operation for the city’s animal shelter. The NOI is posted to disclose where
and when owners can pick up their impounded animals. For the later years
of the audit (FY 2002-03, FY 2005-06, FY 2006-07, and FY 2007-08), the
animal shelter was closed on Sundays and Mondays. The shelter was open
an extra hour on Wednesdays and was also open six hours on Saturdays in
order to comply with the mandate. However, the shelter was closed on the
last Saturday of every month. Therefore, allowable costs are for the extra
animal shelter employees needed for owner redemption for 40 Saturdays
City of Hayward Animal Adoption Program
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a year (at six hours per additional employee) as well as 12 Wednesday
evenings a year (at one hour per additional employee).
For the earlier years of the audit period (FY 1998-99, FY 1999-2000, FY
2000-01, and FY 2001-02) the shelter was open for six hours on every
Saturday of the year but was not open an extra hour on Wednesdays, as
shown on an NOI dated October, 2001. According to shelter staff, this was
also the animal shelter’s schedule prior to October 2001. Therefore,
allowable costs are for the extra animal shelter employees needed for
owner redemption for 52 Saturdays a year (at six hours per additional
employee) for these four years.
Staffing Requirements
We determined that when the shelter is open to the public to make animals
available for owner redemption, one additional Animal Care Attendant,
two Police Records Clerks II, one “floating” Police Records Clerk II (may
be on shelter staff on limited duty), and one Senior Police Records Clerk
Supervisor or Acting Records Supervisor were on duty to perform the
required mandated activities. Our calculations of allowable costs for each
year of the audit period were based on the salaries and benefits and related
indirect costs of these employees according to the hours of operation noted
in the paragraph above.
As noted below, the city’s claims included costs under this cost component
for all shelter employees that were on duty during the holding period days.
Only the employees noted above were on duty to make animals available
for owner redemption. However, the additional employees on duty also
performed reimbursable activities that are already included in other cost
components of the city’s claims (care and maintenance, feral cats, lost-
and-found lists, non-medical records, and necessary and prompt veterinary
care).
For FY 1998-99, the city claimed 2,808 hours for the six-month period
allowable for seven Animal Care Attendants, three Police Records Clerks,
one Animal Control Officer, and one Senior Animal Care Attendant for
six hours per employee for every Saturday. For FY 1998-99, making dogs
and cats available for owner redemption is not reimbursable. However,
costs incurred for owner redemption of “other animals” was reimbursable
beginning January 1, 1999. We determined that shelter employees worked
780 total hours during the 26 Saturdays that the shelter was open between
January 1 and June 30, 1999. As “other animals” comprised 4.72% of the
total animal population for FY 1998-99, that pro-rata percentage was
applied to the 780 employee hours. Accordingly, we determined that 37
total hours were allowable.
For FY 1999-2000, FY 2000-01, and FY 2001-02, the city claimed 5,616
employee hours for each year for seven Animal Care Attendants, three
Police Records Clerks, one Animal Control Officer, and one Senior
Animal Care Attendant for six hours per employee for every Saturday. We
calculated allowable costs based on the shelter schedule for these years
and the additional employees required for this cost component. We
determined that 1,560 employee hours were allowable for each of these
fiscal years.
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For FY 2002-03, the city claimed 3,744 employee hours for seven full-
time Animal Care Attendants, two additional part-time Animal Care
Attendants, three Police Records Clerks, and one Senior Animal Care
Attendant for six hours per employee for every Saturday. We determined
that 1,260 employee hours were allowable for this fiscal year.
For FY 2005-06, the city claimed 2,912 employee hours for five Animal
Care Attendants, two Police Records Clerks, and one Senior Animal Care
Attendant, one Acting Records Supervisor, and one Volunteer Coordinator
for six hours per employee for every Saturday. We determined that 1,260
employee hours were allowable for this fiscal year.
For FY 2006-07 and FY 2007-08, the city claimed 3,432 employee hours
for five Animal Care Attendants, four Police Records Clerks, one Senior
Animal Care Attendant, one Senior Records Clerk, and one Animal Care
Attendant Supervisor for six hours per employee for every Saturday. We
determined that 1,260 employee hours were allowable for both years.
The following table summarizes the claimed and allowable hours for
making animals available for owner redemption per the Holding Period
cost component on Saturdays:
Hours
Fiscal Year Claimed Allowable Adjustment
1998-99 $ 2,808 $ 37 $ (2,771)
1999-2000 5,616 1,560 (4,056)
2000-01 5,616 1,560 (4,056)
2001-02 5,616 1,560 (4,056)
2002-03 3,744 1,260 (2,484)
2005-06 2,912 1,260 (1,652)
2006-07 3,432 1,260 (2,172)
2007-08 3,432 1,260 (2,172)
Total $ 33,176 $ 9,757 $ (23,419)
Recommendation
The Animal Adoption Program was suspended in the FY 2010-11 through
FY 2017-18 Budget Acts. If the program becomes active again, we
recommend that the city ensure that claimed costs include only eligible
costs, are based on actual costs, and are properly supported.
The city claimed $8,803 during the audit period under this cost component.
We determined that $14,210 was allowable. The costs were understated
by $5,407 because the actual costs incurred to perform the mandated
activities required exceeded the costs that the city estimated for the first
six years of the audit period, and because the number of cats tested was
misstated.
FINDING 5—
Understated feral cats
costs
City of Hayward Animal Adoption Program
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The following table summarizes the claimed, allowable, and unallowable
costs separately for salaries and benefits and related indirect costs for the
audit period by fiscal year:
Salaries and Benefits Indirect Costs
Fiscal Year Claimed Allowable Adjustment Claimed Allowable Adjustment
1998-99 $ — $ 620 $ 620 $ — $ 147 $ 147
1999-2000 — 1,262 1,262 — 233 233
2000-01 — 1,067 1,067 — 212 212
2001-02 — 1,527 1,527 — 301 301
2002-03 3,023 1,677 (1,346) 490 272 (218)
2005-06 840 2,013 1,173 137 327 190
2006-07 724 1,941 1,217 207 555 348
2007-08 2,971 1,791 (1,180) 411 265 (146)
Total $ 7,558 $ 11,898 $ 4,340 $ 1,245 $ 2,312 $ 1,067
The following table summarizes total claimed, allowable, and unallowable
costs for the Feral Cats cost component by fiscal year:
Salaries, Benefits, and Indirect Costs
Fiscal Year Claimed Allowable Adjustment
1998-99 $ — $ 767 $ 767
1999-2000 — 1,495 1,495
2000-01 — 1,279 1,279
2001-02 — 1,828 1,828
2002-03 3,513 1,949 (1,564)
2005-06 977 2,340 1,363
2006-07 931 2,496 1,565
2007-08 3,382 2,056 (1,326)
Total $ 8,803 $ 14,210 $ 5,407
The city estimated costs for this component for the first six years of the
audit period. In addition, the costs were not claimed under this cost
component for the first four years of the audit period because they were
commingled in the city’s claims either as part of the non-medical records
cost component or the care and maintenance cost component. The city
also misstated the number of cats tested. The city conducted a time study
in July of 2007, and used the results to claim costs for FY 2006-07 and FY
2007-08. We also used the time study results to determine allowable costs
for the first six years of the audit period.
Time Study
The city conducted a time study in July of 2007 to support the time it takes
shelter staff to verify whether a cat is feral or tame. The city documented
the time that it took Animal Care Attendants, Senior Animal Care
Attendants, and Senior Police Records Clerks II to conduct a feral cat test.
The time study determined that the above employees spent an average of
one minute, 54 seconds (1.9 minutes) per cat to determine if the cat was
feral or tame.
We analyzed the time study results and applied them to the entire audit
period, including the first four audit years when the city did not have any
support for this component. Although the calculations of the time study
were correct, the percentages of time spent by an Animal Care Attendant
(46.48% of the feral cat tests) and the Senior Police Records Clerk II
(12.67% of the feral cat tests) were transposed. As noted above, the time
study showed that employees spent an average of 1.9 minutes per cat to
City of Hayward Animal Adoption Program
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determine if the cat was feral or tame, but the city applied the time study
results with the transposed percentages.
The city’s Kennel Statistics Reports provided the maximum eligible
number of cats that may have had feral cat tests. These reports detailed the
number of cats and kittens and their final outcome per fiscal year. We
interviewed the Senior Records Clerk to determine which categories of
cats and kittens might have received a feral cat test. The Kennel Statistics
Report and the interview were essential because there is no current system
in place to track exactly which cats were given a feral cat test and which
were not.
The following table summarizes the claimed and allowable number of
eligible cats which may have had a feral cat test during the audit period:
Fiscal Year Claimed Allowable Adjustment
1998-99 $ — $ 806 $ 806
1999-2000 — 1,611 1,611
2000-01 769 1,302 533
2001-02 769 1,836 1,067
2002-03 1,060 1,811 751
2005-06 703 1,798 1,095
2006-07 694 1,661 967
2007-08 2,234 1,260 (974)
Total $ 6,229 $ 12,085 $ 5,856
The program’s parameters and guidelines (Section IV.B.6–Feral Cats)
identify the following reimbursable activity:
Beginning January 1, 1999, for verifying whether a cat is feral or tame
by using a standardized protocol within the first three days of the
required holding period, if an apparently feral cat has not been reclaimed
by its owner or caretaker.
Recommendation
The Animal Adoption Program was suspended in the FY 2010-11 through
FY 2017-18 Budget Acts. If the program becomes active again, we
recommend that the city ensure that claimed costs include only eligible
costs, are based on actual costs, and are properly supported.
The city claimed $105,971 during the audit period for the maintenance of
lost-and-found lists. We determined that $47,042 is allowable and $58,929
is unallowable. The unallowable costs occurred because the city claimed
costs based on estimates. Allowable costs were based on a time study that
the city conducted during the course of the audit.
FINDING 6—
Unallowable lost-and-
found lists costs
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The following table summarizes the claimed, allowable, and unallowable
costs separately for salaries and benefits and related indirect costs for the
audit period for the Lost and Found Lists cost component by fiscal year:
Salaries and Benefits Indirect Costs
Fiscal Year Claimed Allowable Adjustment Claimed Allowable Adjustment
1998-99 $ 7,357 $ 1,839 $ (5,518) $ 1,744 $ 436 $ (1,308)
1999-2000 8,243 4,342 (3,901) 1,525 803 (722)
2000-01 9,891 4,625 (5,266) 1,968 920 (1,048)
2001-02 15,789 4,733 (11,056) 3,111 932 (2,179)
2002-03 20,597 5,071 (15,526) 3,337 822 (2,515)
2005-06 8,017 5,780 (2,237) 1,302 939 (363)
2006-07 8,389 5,994 (2,395) 2,401 1,716 (685)
2007-08 10,805 7,047 (3,758) 1,495 1,043 (452)
Total $ 89,088 $ 39,431 $ (49,657) $ 16,883 $ 7,611 $ (9,272)
The following table summarizes total claimed, allowable, and unallowable
costs for the Lost and Found Lists cost component by fiscal year:
Salaries, Benefits, and Indirect Costs
Fiscal Year Claimed Allowable Adjustment
1998-99 $ 9,101 $ 2,275 $ (6,826)
1999-2000 9,768 5,145 (4,623)
2000-01 11,859 5,545 (6,314)
2001-02 18,900 5,665 (13,235)
2002-03 23,934 5,893 (18,041)
2005-06 9,319 6,719 (2,600)
2006-07 10,790 7,710 (3,080)
2007-08 12,300 8,090 (4,210)
Total $ 105,971 $ 47,042 $ (58,929)
Time Study
All costs claimed were initially unallowable because the city estimated
costs claimed for this cost component. During the audit period, the city
conducted a time study to determine the time required to comply with the
mandated activities for this cost component. The time study results are
based on time captured during a typical four week period. The time study
determined that shelter employees spent a total of 183.52 hours a year to
comply with all five requirements of the Lost and Found Lists component
(125.23 hours by the Police Records Clerks II, 51.35 hours by the Animal
Care Attendants, and 6.94 hours by the Acting Records Supervisor).
Allowable hours for the classifications of Police Records Clerk II and
Animal Care Attendants were applied to one employee per classification
per year.
For FY 1998-99, this portion of the mandate began on January 1, 1999.
Accordingly, we divided total hours allowable per the time study in half.
The program’s parameters and guidelines (Section IV.B.7–Lost and Found
Lists) identify the follow reimbursable activities:
Beginning January 1, 1999, for providing owners of lost animals and
those who find lost animals with all of the following:
Ability to list the animals they have lost or found on “lost and found”
lists maintained by the local agency;
City of Hayward Animal Adoption Program
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Referrals to animals listed that may be the animals the owner or finders
have lost or found;
The telephone numbers and addresses of other pounds and shelters in
the same vicinity;
Advice as to means of publishing and disseminating information
regarding lost animals; and
The telephone numbers and addresses of volunteer groups that may be
of assistance in locating lost animals.
Recommendation
The Animal Adoption Program was suspended in the FY 2010-11 through
FY 2017-18 Budget Acts. If the program becomes active again, we
recommend that the city ensure that claimed costs include only eligible
costs, are based on actual costs, and are properly supported.
The city claimed $81,146 for costs to maintain non-medical records. We
determined that $72,394 is allowable and $8,752 is unallowable. The
unallowable costs occurred because the city claimed costs based on
estimates, misstated the number of animals processed, made calculation
errors in its time study, and misclassified costs.
The following tables summarize the claimed, allowable, and unallowable
costs separately for salaries and benefits and the related indirect costs,
materials and supplies, and contract services for the audit period for the
Non-Medical Records cost component by fiscal year:
Salaries and Benefits Indirect Costs
Fiscal Year Claimed Allowable Adjustment Claimed Allowable Adjustment
1998-99 $ — $ 2,781 $ 2,781 $ — $ 659 $ 659
1999-2000 — 5,613 5,613 — 1,038 1,038
2000-01 — 6,150 6,150 — 1,224 1,224
2001-02 — 6,520 6,520 — 1,284 1,284
2002-03 — 6,960 6,960 — 1,128 1,128
2005-06 31,802 7,788 (24,014) 5,166 1,265 (3,901)
2006-07 11,896 6,969 (4,927) 3,405 1,994 (1,411)
2007-08 12,777 7,131 (5,646) 1,767 1,055 (712)
Total $ 56,475 $ 49,912 $ (6,563) $ 10,338 $ 9,647 $ (691)
Materials and Supplies
Fiscal Year Claimed Allowable Adjustment
1998-99 $ 10,679 $ — $ (10,679)
Contract Services Audit
Adjustment Fiscal Year Claimed
Supported
Costs
Pro Rata
Percentage
Allowable
Costs
1998-99 * $ — $ 2,880 35.00% $ 504 $ 504
1999-2000 — 2,880 35.00% 1,008 1,008
2000-01 — 2,880 35.00% 1,008 1,008
2001-02 — 2,880 35.00% 1,008 1,008
2002-03 — 2,880 35.00% 1,008 1,008
2005-06 — 2,880 35.00% 1,008 1,008
2006-07 — 10,392 35.00% 3,637 3,637
2007-08 3,654 10,440 35.00% 3,654 —
Total $ 3,654 $ 38,112 $ 12,835 $ 9,181
*Costs for FY 1998-99 are reimbursable beginning on January 1, 1999
FINDING 7—
Unallowable non-
medical records costs
City of Hayward Animal Adoption Program
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The following table summarizes the combined claimed, allowable, and
unallowable costs for the Non-Medical Records cost component for the
audit period by fiscal year.
Combined Costs
Fiscal Year Claimed Allowable Adjustment
1998-99 $ 10,679 $ 3,944 $ (6,735)
1999-2000 — 7,659 7,659
2000-01 — 8,382 8,382
2001-02 — 8,812 8,812
2002-03 — 9,096 9,096
2005-06 36,968 10,061 (26,907)
2006-07 15,301 12,600 (2,701)
2007-08 18,198 11,840 (6,358)
Total $ 81,146 $ 72,394 $ (8,752)
Time Study
All costs claimed were initially unallowable because the city estimated all
costs claimed for this cost component. The city conducted a time study for
a one-month period in October of 2007 to determine the time required to
maintain non-medical animal records. The city studied the time required
to process the status of incoming animals and the final disposition of
animals. These activities were performed by various employees. The city’s
time study results showed that 3.38 minutes were spent processing
incoming animals and 0.93 minutes were spent processing the final
disposition of animals.
However, during our review of the time study results, we noted that the
city made several calculation errors. First, the time spent by one employee
was entered as five hours and two minutes instead of two minutes.
Secondly, the percentages of time spent by an Animal Records Supervisor
and Animal Care Attendants to perform mandated activities were
transposed. When we adjusted for these calculation errors, we determined
that the time study supported 1.55 minutes to process incoming animal
records and 0.94 minutes to process final disposition records.
Number of Animal Records Processed
For FY 1998-99, the city claimed salaries and benefits for this cost
component under materials and supplies. For FY 1999-2000 through FY
2002-03, the city’s claims commingled costs for this component under
care and maintenance. We were unable to determine how many animal
records were used to claim these costs.
During the course of the audit, we obtained the city’s raw animal data from
its Chameleon system database, analyzed the outcome reports containing
the animal data, and performed a count for the number of animal records
that appeared in each year’s database. The city was unable to provide any
animal database information for FY 1998-99 and FY 1999-2000. We used
an average of animal records from the last six years of the audit period to
determine an average number of animal records processed during these
two fiscal years.
City of Hayward Animal Adoption Program
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The following table summarizes the number of non-medical records
processed during the audit period:
Fiscal Year
Claimed
Incoming
Records
Allowable
Incoming
Records Adjustment
Claimed
Outcome
Records
Allowable
Outcome
Records Adjustment
1998-99* 1,731 2,872 1,141 — 2,872 2,872
1999-2000* — 5,745 5,745 — 5,745 5,745
2000-01 — 6,112 6,112 — 6,112 6,112
2001-02 — 6,341 6,341 — 6,341 6,341
2002-03 — 6,210 6,210 — 6,210 6,210
2005-06 6,200 6,007 (193) — 6,007 6,007
2006-07 4,841 5,214 373 4,841 5,214 373
2007-08 4,060 4,585 525 4,060 4,585 525
Totals 16,832 43,086 26,254 8,901 43,086 34,185
___________________
* Records for FY 1998-99 and FY 1999-2000 represent an average of the last six years of
the audit period. For FY 1998-99, reimbursement began on January 1, 1999, so the average
was divided in half.
Contract Services—Cost of Chameleon License Renewal
The city claimed $3,654 under this cost component for software license
renewal costs. We determined that $12,835 is allowable. The costs were
understated by $9,181 because allowable costs were commingled with
costs for other cost components.
Allowable License Renewal Costs
The city determined that 35% of the license renewal fee was for mandate-
related activities.
For 1998-99, we determined that $504 is allowable for software license
renewal fees. The animal shelter maintained an animal database called
“Records Management System” (RMS) for this fiscal year. However, the
city did not have any information concerning costs incurred for
maintaining the RMS system. To determine allowable costs, we used an
average based on Chameleon system database costs for the last three years
of the audit period ($2,880 × 35% ÷ 2).
For FY 1999-2000 through FY 2005-06, $1,008 is allowable per year for
software license renewal fees ($960 for three workstations = $2,880 × the
pro rata percentage of 35%). The city claimed the full license fee amount
of $2,880 for FY 1999-2000 and FY 2000-01 under the Computer
Software cost component. We reclassified these costs to this cost
component and applied the applicable pro-rata percentage. The city also
claimed $1,008 for FY 2005-06 under the Computer Software cost
component, which we reclassified under this cost component.
For FY 2006-07, we determined that $3,637 is allowable for software
license renewal fees for one server plus nine workstations ($960 for 10
total workstations × .0825 tax × the 35% pro rata percentage). The city
claimed $3,637 under the Computer Software cost component, which we
reclassified under this cost component.
For FY 2007-08, we determined that $3,654 is allowable for software
license renewal fees for one server plus nine work stations ($960 for 10
total workstations × 0.0875 tax × the 35% pro rata portion).
City of Hayward Animal Adoption Program
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The program’s parameters and guidelines (section IV.B.8–Maintaining
Non-Medical Records) identify the following reimbursable activities:
Beginning January 1, 1999, for maintaining non-medical records on
animals that are either taken up, euthanized after the holding period, or
impounded. Such records shall include the following:
The date the animal was taken up, euthanized, or impounded;
The circumstances under which the animal is taken up, euthanized, or
impounded;
The names of the personnel who took up, euthanized, or impounded
the animal; and
The final disposition of the animal, including the name of the person
who euthanized the animal or the name and address of the adopting
party.
The parameters and guidelines (section IV.B.8–Maintaining Non-Medical
Records) identify the following reimbursable activity:
The cost of software license renewal contracts, to the extent these cost
are not claimed as an indirect cost under these parameters and guidelines,
is eligible for reimbursement under Section V (A) (2) of the parameters
and guidelines. If the computer software is utilized in some way that is
not directly related to the maintenance of records specified in this
section, only the pro rata portion of the software license renewal contract
that is used for compliance with this section is reimbursable.
Recommendation
The Animal Adoption Program was suspended in the FY 2010-11 through
FY 2017-18 Budget Acts. If the program becomes active again, we
recommend that the city ensure that claimed costs include only eligible
costs, are based on actual costs, and are properly supported.
The city claimed $82,870 for necessary and prompt veterinary care. We
determined that $87,832 is allowable and costs were underclaimed by
$4,962. The costs were misstated because costs were unsupported, were
misclassified within other cost components, and were claimed incorrectly.
The following table summarizes the claimed, allowable, and unallowable
costs separately for salaries and benefits, related indirect costs, materials
and supplies, and contract services for the Necessary and Prompt
Veterinary Care cost component for the audit period by fiscal year:
Salaries and Benefits Indirect Costs
Fiscal Year Claimed Allowable Adjustment Claimed Allowable Adjustment
1998-99 $ — $ 478 $ 478 $ — $ 113 $ 113
1999-2000 — 970 970 — 179 179
2000-01 — 988 988 — 197 197
2001-02 — 1,051 1,051 — 207 207
2002-03 — 780 780 — 126 126
2005-06 — 1,385 1,385 — 225 225
2006-07 — 1,389 1,389 — 398 398
2007-08 — 1,313 1,313 — 194 194
Total $ — $ 8,354 $ 8,354 $ — $ 1,639 $ 1,639
FINDING 8—
Misstated necessary and
prompt veterinary care
costs
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Materials and Supplies Contract Services
Fiscal Year Claimed Allowable Adjustment Claimed Allowable Adjustment
1998-99 $ 18,686 $ 1,170 $ (17,516) $ — $ 3,784 $ 3,784
1999-2000 — 1,905 1,905 — 7,579 7,579
2000-01 — 2,259 2,259 — 7,332 7,332
2001-02 — 2,373 2,373 — 7,287 7,287
2002-03 — 1,776 1,776 — 6,597 6,597
2005-06 14,836 4,421 (10,415) 2,553 7,421 4,868
2006-07 — 1,800 1,800 21,792 8,759 (13,033)
2007-08 7,708 1,920 (5,788) 17,295 11,456 (5,839)
Total $ 41,230 $ 17,624 $ (23,606) $ 41,640 $ 60,215 $ 18,575
The following table summarizes the combined claimed, allowable, and
unallowable costs for the Necessary and Prompt Veterinary Care cost
component for the audit period by fiscal year:
Combined Costs
Fiscal Year Claimed Allowable Adjustment
1998-99 $ 18,686 $ 5,545 $ (13,141)
1999-2000 — 10,633 10,633
2000-01 — 10,776 10,776
2001-02 — 10,918 10,918
2002-03 — 9,279 9,279
2005-06 17,389 13,452 (3,937)
2006-07 21,792 12,346 (9,446)
2007-08 25,003 14,883 (10,120)
Total $ 82,870 $ 87,832 $ 4,962
Basically, allowable costs for this cost component consist of costs incurred
for the administration of a wellness vaccine and the conduct of an initial
physical exam, as well as certain necessary and prompt care services. The
city’s claims had costs for veterinary care scattered throughout various
cost components.
Allowable Costs—Administration of Wellness Vaccine
Administering a wellness vaccine constitutes a two-part reimbursable cost.
The first part relates to the labor costs associated with administering the
wellness vaccine to eligible animals. The Animal Care Attendants
administer the wellness vaccine and the time spent is supported by a time
study. The second part is the actual cost of the wellness vaccines given to
eligible animals.
Labor Costs
The city conducted a time study from July 21, 2009, through August 28,
2009. The Animal Care Attendants who perform this function recorded the
time spent to administer a wellness vaccine to cats and dogs, which
averaged 2.54 minutes per eligible cat and dog. We applied the results of
the time study to all years of the audit period. The table above details
allowable salaries, benefits, and related indirect costs based on the time
study results.
City of Hayward Animal Adoption Program
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Animal Census Data
We used the city’s raw animal data in order to determine the eligible
number of animals that may have received a wellness vaccine. The number
of eligible animals was based on the population exclusions for this cost
component as outlined in the parameters and guidelines.
Materials and Supplies—Cost of Wellness Vaccines
The costs, as originally claimed, were unallowable because the city totaled
the cost of vaccinations and other medications administered to all animals
and applied percentages. This methodology is not consistent with the
requirements of the parameters and guidelines. Animal shelter
representatives advised that two wellness vaccines are given to dogs and
one wellness vaccine is given to cats. The city provided adequate support
for the costs of vaccines per fiscal year. To determine allowable costs, the
cost per vaccine was multiplied by the number of eligible dogs and cats
treated.
Materials and Supplies Costs Claimed
The city claimed $41,230 during the audit period for materials and
supplies costs ($18,686 for FY 1998-99, $14,836 for FY 2005-06, and
$7,708 for FY 2007-08).
For FY 1998-99, the city claimed $18,686 using the following calculation:
($10.92 veterinary cost × 1,701 eligible dogs and cats) + ($3.69 veterinary
cost × 30 eligible “other” animals). The methodology used to claim these
costs is not consistent with the parameters and guidelines. Also, “other
animals” do not receive a wellness vaccine, according to city
representatives.
For FY 1999-2000 through FY 2002-03, the city did not claim any costs
under this cost component. However, we determined that the city claimed
veterinary care costs by comingling them as part of the care and
maintenance cost component.
For FY 2005-06 through FY 2007-08, the city used the same methodology
to determine the amount of costs claimed. For each year, the city
determined the total cost of vaccinations and other medications
administered for necessary and prompt veterinary care. The city applied a
formula to these costs based on a pro rata percentage of dogs and cats that
were strays and the number that were euthanized after the required holding
period. However, this formula is inconsistent with the requirements of the
parameters and guidelines.
For FY 2005-06, the city claimed $14,836 based on total medication costs
of $54,420. To determine claimed costs, the city used the following
formula: ($54,420 × 44.35%) × 61.47% = $14,836. The 44.35% represents
the percentage of dogs and cats that were strays and the 61.47% represents
the percentage of dogs and cats that were euthanized after the holding
period.
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For FY 2006-07, the city claimed $1,584 based on total medication costs
of $6,374. The city used the following formula: ($6,373.62 × 88.42%) ×
28.11% = $1,584. The 88.42% represents the percentage of dogs and cats
that were strays, and the 28.11% represents the percentage of dogs and
cats that were euthanized after the holding period. For this fiscal year, the
city claimed costs for materials and supplies as contract services costs. We
reclassified the allowable costs as materials and supplies costs in the table
above.
For FY 2007-08, the city claimed $7,708 based on total medication costs
of $25,740.36. The city used the following formula: ($(25,740) ×
(91.05)%) × (32.89)% = $7,708. The 91.05% represents the percentage of
dogs and cats that were strays, and the 32.89% represents the percentage
of dogs and cats that were euthanized after the holding period.
Analysis of Allowable Costs—Wellness Vaccines
We determined that allowable costs totaled $17,624 for the audit period
based on the cost of wellness vaccines incurred by the city for each fiscal
year and the number of eligible animals treated. Our calculations included
the following adjustments:
For FY 1998-99, this component was reimbursable beginning on
January 1, 1999. To calculate the correct amount of allowable costs, we
divided by half the amount incurred for vaccines.
The city did not acquire the Chameleon database until FY 1999-2000,
and the data was incomplete for that year. To determine the number of
eligible dogs and cats for FY 1998-99 and FY 1999-2000, we used an
average based on the number of eligible dogs and cats from the last six
years of the audit period.
The following table summarizes the calculations of allowable materials
and supplies costs for wellness vaccines by fiscal year:
Dogs Cats
Fiscal Year
Vaccine
Costs
Eligible
Dogs
Allowable
Costs
Vaccine
Costs
Eligible
Cats
Allowable
Costs
1998-99 $ 1.79 × 468 $ 838 $ 0.64 × 519 $ 332
1999-2000 3.04 × 468 1,423 0.93 × 519 483
2000-01 3.04 × 623 1,894 0.93 × 393 365
2001-02 3.05 × 647 1,973 0.97 × 412 400
2002-03 3.27 × 440 1,439 1.15 × 293 337
2005-06 5.82 × 472 2,747 2.62 × 639 1,674
2006-07 3.05 × 327 997 1.05 × 764 802
2007-08 3.79 × 296 1,122 1.30 × 614 798
Totals $ 12,433 $ 5,191
Total allowable costs $ 17,624
Allowable Costs–Initial Physical Exam and Veterinary Care Services
The city claimed $41,640 as contract services costs under the Necessary
and Prompt Veterinary Care cost component during the audit period. We
determined that $60,215 is allowable ($23,435 for conducting initial
physical exams and $36,780 for itemized medical services performed
during the holding period). The costs were understated by $18,575 because
costs were claimed incorrectly, were comingled with various other cost
City of Hayward Animal Adoption Program
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components, and were not properly segregated based on the specifications
of the parameters and guidelines.
Contract Services—Initial Physical Examination
The city contracts with a private veterinarian for various medical services.
We interviewed the Veterinarian, who stated that she performs the initial
physical examination of animals. Although the Animal Care Attendants
perform a visual inspection of the animal, the veterinarian emphasized that
the Animal Care Attendants do not have the authority to classify an animal
as “adoptable,” “treatable,” or “non-rehabilitatable.”
We noted that the Veterinarian visits the shelter on Mondays and
Thursdays and the city pays a fixed fee per month for various medical
services, including emergency vet care. In addition, the veterinarian bills
the shelter separately for any services provided outside of the shelter
contract. These bills are itemized and contain the date that services were
performed, an animal ID number, and the specific services performed.
To determine allowable costs for the conduct of initial physical exams, the
city’s shelter management proposed, and we accepted, that we use the
annual contract amount for veterinary services and divide it by the total
number of animals that came into the shelter for the year to arrive at a cost
per animal. The cost per animal would then be multiplied by the number
of animals that may have received an initial physical examination. In
addition, allowable costs include the number of initial physical
examinations that were performed at the veterinarian’s office. These out-
of-shelter examinations are billed separately at $27 per exam.
The table below summarizes the calculation of allowable costs for initial
physical examinations:
Fiscal Year
Contract
Amount
Incoming
Animals
Cost per
Animal
Eligible
Animals Subtotal
Offsite
Exams and
Exam Fee 1
Allowable
Costs
1998-99 $ 6,000 ÷ 4,431 = $ 1.35 × 987 = $ 1,332 + $ — = $ 1,332
1999-2000 12,000 ÷ 4,431 = 2.71 × 987 = 2,675 + — = 2,675
2000-01 12,000 ÷ 5,024 = 2.39 × 1,016 = 2,428 + — = 2,428
2001-02 12,000 ÷ 5,327 = 2.25 × 1,059 = 2,383 + — = 2,383
2002-03 12,000 ÷ 5,196 = 2.31 × 733 = 1,693 + — = 1,693
2005-06 12,000 ÷ 5,460 = 2.20 × 1,111 = 2,444 + — = 2,444
2006-07 2 8,000 ÷ 3,129 = 2.56 × 719 = 1,841 + — = 1,841
2006-07 2 8,000 ÷ 1,564 = 5.12 × 360 = 1,843 + 324 = 2,167
2007-08 24,000 ÷ 4,016 = 5.98 × 861 = 5,149 + 1,323 = 6,472
Totals $ 21,788 $ 1,647 $ 23,435
________________________ 1 Includes 12 offsite exams for FY 2006-07 and 49 exams for FY 2007-08 at a fee of
$27 per exam. 2 The city contracted with a different veterinarian eight months into FY 2006-07.
Contract Services—Itemized Necessary and Prompt Veterinary Care
Invoices
The city submitted itemized invoices with its claims for specific medical
services performed by a veterinarian. However, the claimed amount
included services for animals that were excluded per the provisions of the
parameters and guidelines. We advised shelter management that costs
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were reimbursable only for eligible medical services performed for
eligible animals during the required holding period. We requested that the
city properly determine which invoices met these criteria. Accordingly,
shelter staff reviewed each invoice and provided a spreadsheet of
reimbursable veterinary costs per year. As itemized invoices were not
available for FY 1998-99 through FY 2002-03, we used an average of
allowable medical services costs for the last three years of the audit period
and applied this amount as allowable costs for those years.
The table below summarizes the allowable costs by fiscal year for the
Necessary and Prompt Veterinary Care cost component:
Fiscal Year Amount Allowable
1998-99 $ 2,452
1999-2000 4,904
2000-01 4,904
2001-02 4,904
2002-03 4,904
2005-06 4,977
2006-07 4,751
2007-08 4,984
Total allowable $ 36,780
The parameters and guidelines (section IV.B.9–Necessary and Prompt
Veterinary Care) identify the following reimbursable activities:
Beginning January 1, 1999 – Providing “necessary and prompt
veterinary care” for stray and abandoned animals, other than injured cats
and dogs given emergency treatment that die during the holding period
or are ultimately euthanized during the holding periods specified in
Statutes of 1998, Chapter 752.
Necessary and prompt veterinary care” means all reasonably necessary
medical procedures performed by a veterinarian or someone under the
supervision of a veterinarian to make stay or abandoned animals
“adoptable.” The following veterinary procedures, if conducted, are
eligible for reimbursement:
An initial physical examination of the animal to determine the
animal’s baseline health status and classification as “adoptable,”
“treatable,” or “non-rehabilitatable.”
A wellness vaccine administered to “treatable” or “adoptable”
animals.
Veterinary care to stabilize and or relive the suffering of a “treatable”
animal.
Veterinary care intended to remedy any applicable disease, injury, or
congenital or hereditary condition that adversely affects the health of
a “treatable” animal or that is likely to adversely affect the animal’s
health in the future, until the animal becomes “adoptable.”
Population Exclusions
Eligible claimants are not entitled to reimbursement for providing
“necessary and prompt veterinary care” to the following population of
animals:
Animals that are irremediably suffering from a serious illness or severe
injury,
Newborn animals that need maternal care and have been impounded
without their mothers,
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Animals too severely injured to move or where a veterinarian is not
available and it would be more humane to dispose of the animal,
Owner relinquished animals, and
Stray or abandoned animals that are ultimately redeemed, adopted, or
released to a nonprofit animal rescue or adoption organization.
Veterinary Care Exclusions
Eligible claimants are not entitled to reimbursement for providing the
following veterinary procedures:
Emergency treatment given to injured cats and dogs,
Administration of rabies vaccination to dogs,
Implantation of microchip identification;
Spay or neuter surgery and treatment; and
Euthanasia
Recommendation
The Animal Adoption Program was suspended in the FY 2010-11 through
FY 2017-18 Budget Acts. If the program becomes active again, we
recommend that the city ensure that claimed costs include only eligible
costs, are based on actual costs, and are properly supported.
The city claimed materials and supplies costs totaling $19,617 for the
Procuring Equipment cost component. The costs claimed were for the
procurement of kennel equipment in FY 2005-06. We found that the entire
amount is allowable. The city understated costs for FY 1999-2000 by $452
because it did not claim the allowable pro-rate share of eligible computer
equipment costs. The city understated costs by $2,963 for FY 2000-01
because it misclassified the allowable pro-rata share of computer
equipment costs and claimed them under the Computer Software cost
category instead.
The following table summarizes the calculation of allowable costs for
kennel equipment claimed for FY 2005-06:
The following table summarizes the calculation of allowable costs for
computer equipment purchases during the audit period:
Fiscal Year
1999-2000 2000-01 Totals
Computer equipment $ 1,292 $ 8,465 $ 9,757
Pro-rata percentage × 35% × 35% × 35%
Allowable costs $ 452 $ 2,963 $ 3,415
Pro-rata Pro-rata
Supported Percentage Amount Percentage Allowable
Fiscal Year Costs Claimed Claimed Allowable Costs
2005-06 71,958$ 27.262% 19,617$ 27.262% 19,617$
Total 71,958$ 19,617$ 19,617$
REVISED
FINDING 9—
Understated
equipment
procurement costs
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The parameters and guidelines (section IV.B.10) identify the following
reimbursable activity:
Beginning January 1, 1999, procuring medical, kennel, and computer
equipment necessary to comply with the reimbursable activities listed in
Section IV (B) of these parameters and guidelines, to the extent these
costs are not claimed as an indirect cost under Section V (B) of these
parameters and guidelines. If the medical, kennel, and computer
equipment is utilized in some way not directly related to the mandated
program or the population of animals listed in Section IV (B), only the
pro rata portion of the activity that is used for the purpose of the
mandated program is reimbursable.
Recommendation
The Animal Adoption Program was suspended in the FY 2010-11 through
FY 2017-18 Budget Acts. If the program becomes active again, we
recommend that the city ensure that claimed costs include only eligible
costs, are based on actual costs, and are properly supported.
The city overstated offsetting savings/reimbursements by $41,304 during
the audit period. Costs were overstated because the city offset $14,819
received for dog license fees and $26,485 claimed by the City of
San Leandro under the Animal Adoption Program. However, we
determined that the amount of offsetting savings/reimbursements
applicable to the city’s claims was $0.
Fiscal Year
2000-01 2001-02 2002-03 Totals
Claimed offsets:
Dog license revenues $ (6,897) $ (7,922) $ — $ (14,819)
San Leandro contract — — (26,485) (26,485)
Claimed offset $ (6,897) $ (7,922) $ (26,485) $ (41,304)
Allowable offsets:
Dog license revenues $ — $ — $ — $ —
San Leandro contract — — — $ —
Allowed offset — — — —
Audit adjustment $ (6,897) $ 7,922 $ 26,485 $ 41,304
Contract with the City of San Leandro
The City of Hayward had a contract with the City of San Leandro during
FY 2001-02 through FY 2002-03 to provide animal shelter services.
San Leandro also filed mandated cost claims with the State for the Animal
Adoption Program totaling $36,468 ($5,014 for FY 2000-01, $5,829 for
FY 2001-02, and $25,625 for FY 2002-03). The City of Hayward did not
offset the amounts claimed by San Leandro as offsetting revenues in its
claims for FY 2000-01 and FY 2001-02, although $26,485 was offset in
the city’s claim for FY 2002-03.
We were unable to determine if any contract revenues received by the City
of Hayward were for mandated activities. Therefore, we requested, and the
City of Hayward provided, a written statement that all of the contract
revenues received from the City of San Leandro for FY 2000-01 through
FY 2004-05 were for general operating expenditures incurred by the city
for the operation of its animal shelter. Accordingly, as none of the contract
FINDING 10—
Overstated offsetting
savings/reimbursements
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revenues received was used for mandated activities, the City of
San Leandro’s Animal Adoption claims will be reduced to $0.
License Fees
The city claimed offsetting savings/reimbursements for dog license fees
for FY 2000-01 ($6,897) and FY 2001-02 ($7,922). We determined that
these revenues were not mandate-related.
Recommendation
The Animal Adoption Program was suspended in the FY 2010-11 through
FY 2017-18 Budget Acts. If the program becomes active again, we
recommend that the city establish and implement procedures to ensure that
offsetting savings/reimbursements are included in the city’s claims to the
extent that revenues received from contracting cities were used to fund
mandated activities.
State Controller’s Office
Division of Audits
Post Office Box 942850
Sacramento, CA 94250-5874
http://www.sco.ca.gov
S09-MCC-058R